Friday, June 02, 2017

The Future Is Built With Cement … But There Isn’t Any

The Future Is Built With Cement … But There Isn't Any

14ymedio, Reinaldo Escobar, Havana, 26 May 2017 — The cranes show off
their slender anatomy in some areas of Havana where several luxury
hotels are being built. Apart from this landscape of progress, private
construction and repairs face technological problems and shortages. This
week it has been cement's turn.
"This is the third time I have come and I am leaving with an empty
wheelbarrow," a customer on the hunt for construction materials
complained Thursday in the Havana's La Timba neighborhood. The employee
standing behind the counter confirmed that "they are sending less than
before and every day more people come to try to buy it."

To send, to arrive and to supply are the verbs used to refer to the
state distribution of any product, be it eggs, milk powder, or tiles to
cover a roof. There is an enormous supply chain responsible for
distributing construction materials, in a country where 39% of the
housing stock is in "regular or poor" condition.

Since the beginning of the year, gray cement has become the biggest
headache for those involved in construction, a situation that has
worsened in recent weeks.

Several employees in the stores in the capital specializing in
construction materials and that sell their goods in convertible pesos,
told 14ymedio that since the beginning of 2017 they have not received
cement.

The government has chosen to place the product in the network that sells
in Cuban pesos, the so-called national currency, in the face of previous
criticisms of excessive prices in the foreign exchange network. However,
a network of corruption, diversion of resources and re-sales makes it
almost impossible to get one of those sacks with the precious gray powder.

The national cement industry has not yet recovered from the blow that
resulted from the fall of Europe's socialist camp and the withdrawal of
the Soviet Union's subsidies to Cuba. At present, six factories on the
island managed to produce slightly more than 1.4 million tonnes of gray
cement last year, a figure well below the 5.2 million achieved in the
same period in neighboring Dominican Republic, a country with a
comparable population (about 11 million inhabitants), according to a
report from the Producers Association.

The government has assigned the Construction Materials Business Group
(GEICON) to produce cement in each of its variants, in addition to other
building materials such as aggregates, blocks, and flooring elements,
along with asbestos, fibroasphalt and roofing tiles.

The sales and marketing director of the group, Rubén Gómez Medina,
recently explained on national television that despite the sector's
recovery over the last five years, it still cannot meet demand.

The situation becomes complex for self-employed masons, and also for
those who are part of a non-agricultural cooperative. "As there is no
wholesale market, when we are contracted to do a job we have to place
responsibility for the materials on the customer," says Carlos Núñez,
who two years ago obtained a license for that occupation.

The entrepreneur remembers that at first they calculated a budget that
included everything, the plans, the materials and the labor. "Since we
started, the prices of aggregates have changed from one day to the next
and no one can tolerate that."

A bag of gray cement last year cost just over 6 CUC in an official
store. In the open markets the same bag is sold in national currency at
the equivalent of 7 CUC. The lack of supply has meant that in the
underground market, where it is also scarce, the price doubles and in
some areas reaches as high as 18 CUC.

Cement, along with pork or cooking oil, is one of those goods that set
the pace of the everyday economy. Its disappearance or shortage is a
direct blow to the population's quality of life.

Of the more than 23,000 homes that were built during 2015, less than
half were erected by the state. The rest were built by the private sector.

Now, for many, the only option is to buy gray cement on the black
market, or to sleep outside one of the open markets all night to see if
there's an early delivery.

On the outskirts of Fe del Valle Park, mixed among the dozens of people
who connect to the Internet in this popular Wi-Fi zone, resellers
abound. The site has a reputation for being a place where you can find
everything, "even 12 gauge electric cables for electrical
installations," a young man nicknamed El Chino proclaims without modesty.

So as not to be confused with a police informant or an inspector, the
buyer should pronounce the question in the most roundabout way. "How's
the cement coming along, pal?" El Chino arches his eyebrows and with a
precise professional air answers, " P350, which is for mounting plates,
goes out of here at between 10 and 12 CUC a bag and P250, for
plastering, goes for 9."

He pauses, as if he is sorry for what he is about to confess and adds,
"But right now there isn't any."

At the Ministry of Construction (MICONS) the officials questioned do not
clarify the reasons for the shortage, although several cooperative
members engaged in construction assert that part of the production of
the western zone has been sent to Guantánamo province to repair the
houses damaged by Hurricane Matthew.

A MICONS employee, who preferred anonymity, does not agree with that
explanation and insists that "since a group of measures to promote
construction by self-effort was implemented, there was a building
explosion that was not foreseen in the production plans for the
materials… Important hotels are being built and the supply to those
places can't be allowed to fail, so it has been prioritized," he adds.

The most recent version of the Foreign Investment Opportunities
Portfolio describes the objective of the authorities to "promote the
construction of infrastructure and industrial maintenance, mainly for
the nickel, oil and cement industries." But so far potential investors
are wary of putting their money in ventures on the Island.

"What has happened is that the cement industry is bottoming out and can
not withstand the pressure of the high demand," an engineer with 30
years of experience in the sector, who prefers to be called Osvaldo –
not his real name – to avoid reprisals for his statements, tells this
newspaper.

In 2016 the country's factories have had serious problems due to the
lack of maintenance but transportation has also burdened the
results. "We depend on the Cuban Railways to transfer part of the
material used in cement manufacture," Osvaldo said. "It's a chain of
inefficiencies that ends up breaking down at the weakest link: the
customer."

"No new equipment or parts are coming into the country. In many
factories, the furnace engines, the mechanical couplings and the mills
are badly damaged," he adds.

"This industry is the engine of prosperity, because it is the one that
allows houses to be built, people to have more amenities and there is
progress," Osvaldo proudly says. "But if we do not invest a good amount
of money we will continue as we are, between improvisations and defaults."

To illustrate his comment, the engineer shows the side wall of a newly
built house that is still waiting to be plastered. "It's because I
haven't been able to find the cement anywhere," justifies the owner.